USD vs INR, May 7: Rupee Snaps Rebound Rally To Slip Again To 94.91 As Iran Uncertainty Outweighs Easier Oil Prices

The rupee traded lower against the US dollar on Thursday, snapping out of the rebound rally seen yesterday, as uncertainty surrounding a potential US-Iran peace deal and persistent importer demand for dollars offset easing crude oil prices.

The domestic currency was down 12 paise at 94.74 against the dollar at the time of writing. During the session, the rupee touched an intraday high of 94.70 and slipped to a low of 94.91, reflecting volatile trade amid rapidly shifting geopolitical cues.

The rupee had opened 10 paise lower earlier in the day at 94.71 against the greenback, compared with its previous close, even as global markets reacted positively to a sharp correction in oil prices. To be sure, the rupee had taken part in a global relief rally in the previous session, boosted by easing oil prices.

Limited Losses

Today, lower crude oil prices helped limit losses in the rupee. Brent crude has retreated sharply from recent highs after reports suggested the United States and Iran were discussing possible measures to ease tensions and restore shipping access through the Strait of Hormuz.

For India, softer oil prices are generally supportive for the rupee because the country imports a large portion of its crude oil requirements. Lower energy prices help reduce the import bill, ease inflationary pressure and improve the current account outlook.

Lingering Uncertainty

However, lingering uncertainty over the outcome of negotiations between Washington and Tehran prevented the rupee from continuing the rally seen yesterday. Reports indicate that while both sides are engaged in discussions, key disagreements remain unresolved, including issues linked to Iran’s nuclear programme and regional security arrangements.

Market participants also pointed to steady dollar demand from oil importers and corporates, which continued to weigh on the domestic currency. Importers have reportedly been increasing hedging activity in recent weeks amid fears of further volatility in crude prices and currency markets.

Under Pressure

The rupee has remained under pressure for much of 2026 as geopolitical tensions in West Asia triggered a surge in crude prices and heightened risk aversion across emerging markets. The currency recently weakened toward record lows near the 95-per-dollar mark before stabilising on hopes of easing tensions.

Analysts said the Reserve Bank of India is likely to continue closely monitoring the currency market and intervene to prevent excessive volatility if required. Traders will now watch developments in U.S.-Iran negotiations, movements in crude oil prices, foreign fund flows and the dollar index for further direction on the rupee.

Source:

• spot rates from https://www.moneycontrol.com/markets/currencies/